London Forex Report: Cohn Resignation Rattles Risk

London Forex Report: Cohn Resignation Rattles Risk

London Forex Report: News that White House economic adviser Gary Cohn has resigned amid the furore over the Trump import tariffs left traders on a slightly more nervous footing overnight, even though Trump had earlier boasted that “I could take any position in the White House and I’ll have a choice of the 10 top people having to do with that position”. Trump also reiterated that “trade wars aren’t so bad…the trade war hurts them, not us”. Meanwhile, the US Trade Representative Office is also considering clamping down on a wide range of Chinese imports and/or restrictions on Chinese investments in the US on national security risks. Elsewhere, RBA kept its key rate at a record low of 1.5% for the 17th meeting as widely anticipated yesterday, with governor Lowe reiterating the next move was likely to be “up, not down” but “inflation is likely to remain low for some time, reflecting low growth in labour costs and strong competition in retailing”.

NORTH AMERICA Factory orders in the US fell 1.4% MoM after rising 1.8% in Dec, weighed down by relatively sharp decline in durable goods orders, which fell 3.6% after rising 2.7% in Dec. Discounting generally volatile impact of orders of transportation, factory orders growth eased to 0.4% in Jan from 0.9% in Dec.

EUROPE The Markit retail PMI for the Euro area picked up 1.5pts to 52.3 in Feb, suggesting that retail sales picked up last month following two consecutive months of decline. UK’s BRC retail monitor reported that like-for-like sales rose 0.6% YoY in Feb, albeit fractionally stronger than last month. Growth in sales at all stores picked up to 1.6% YoY

ASIA In Australia, retail sales rebounded on a monthly basis, though rising just 0.1% MoM in Jan from a 0.5% decline previously, missing the 0.4% growth markets were looking for. Annually, retail sales growth eased to 2.2% YoY from 3.9% in Dec, led by softer expansion in spending on food, household goods and expenditure at café & restaurants. Meanwhile, the construction sector grew at a quicker pace in Feb, as suggested by an increase on the AiG performance of construction index to 56.0 from 54.3 in Jan. Growth in the sector was driven by increased activity, slightly firmer new construction orders and hiring, but even so, wages grew at a softer pace

Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – The daily close back above 1.2260 opens 1.2440, ahead of 1.2550 near term support is sited at 1.2310 a daily close below here would concern near term bullish bias

1-3 Week View – As 1.2130 now acts as support expect a test of 1.2635 as the next upside objective. Weekly close below 1.19 neutralises bullish objectives opening a test of 1.14.
Retail Sentiment: Bearish
Trading Take-away: Long

Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – 1.3715 achieved, profit taking pullback should encounter offers on a test of 1.3925 as this area caps look for 1.3570 as the next downside objective, a daily close over 1.3925 opens 1.4046

1-3 Week View – As 1.3650 supports 1.45 becomes the next upside objective, only a close back below 1.34 would jeopardise the bullish advance
Retail Sentiment: Neutral
Trading Take-away: Neutral

Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – As 108.44 acts as resistance 103.22 is the next downside objective, the close below 107.10 suggests return to trend confirmed on a daily close below 106.50, near term resistance is sited at 106.55

1-3 Week View – The close below 108 negates the broader bullish theme and opens the psychological 100 magnet as the next downside objective, only a close above 108.50 stabilises the pair, opening 112.50
Retail Sentiment: Bullish
Trading Take-away: Short

Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Breach of 131 sets a top to target 128.50 as 132 caps corrections. A close over 133 stabilises the pair opening a retest of 135

1-3 Week View – The closing breach of 131 concerns the bullish consolidation bias opening a test of 128.50 while this area supports there is a window to retest and breach cycle highs above 137
Retail Sentiment: Neutral
Trading Take-away: Neutral

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